Apple building barriers in the EU Single Market

Back in October 2011, when I still lived in London, I bought two pieces of software for my Macs in the Mac App Store – BBEdit, then priced at £34.99, and Pixelmator, then priced at £20.99*. Those apps have been upgrading happily enough through the App Store system until today.

Today I reinstalled my iMac, wiping the hard disk and installing Mac OS Yosemite from scratch, and then I went to the App Store to re-download and install BBEdit, Pixelmator and others… and they were nowhere to be found.

The reason, it turns out, is that a month ago I changed my App Store location from the United Kingdom to Germany** to download the Cambio Carsharing App onto my iPhone (i.e. not even the Mac!) because as Cambio’s cars are not to be found in the UK, its app is not available in the UK App Store. Why such a discrepancy needs to persist is beyond me – a regular British visitor to Germany could quite legitimately want to see where Cambio’s cars are located.

But anyway, when installing the Cambio App through the German App Store I also had to change the credit card I have listed with Apple as well, and that struck me as rather odd. I have a Visa card from the UK Building Society Nationwide, but the address associated with the card and the account is in Germany. The Apple App Store refused this as a payment card for the German App Store. This is the screenshot of what happens:

So not only are the App Stores national, but so to are the associated credit cards! Is that at all necessary within the European Union?

And then what about the Apps – BBEdit, Pixelmator and the others?

The way to retrieve them, it turns out, is to revert the App Store account to the UK version – requiring of course the UK Visa card to do so(!) – and then the Apps are once more available for download:

The problem would of course then be that if I no longer had a UK Visa card then there would be no way at all to retrieve these Apps. Remember these are Apps that I have legitimately purchased and, when I switched from the UK to the German App Store in the first place, I received no warning that my purchases will not be retrievable. If for some reason I had closed my UK bank account when moving to Germany then none of my purchases could have been retrieved at all***.

Yes, I understand that some rights restrictions mean that still, legally, national law applies to some digital purchases – especially music and films. But please tell me how software to edit text (BBEdit) and photos (Pixelmator) that is available in precisely the same form across the EU should not be portable across the EU, and hence within national versions of the App Store? It’s not as if Apple is technically incapable of tracking what Apps were purchased in which stores.

And tell me as well, why should a German Visa card be needed for the German App Store, and a UK one for the UK App Store?

The next time you hear a politician whining about red tape, and legal barriers to the Single Market, remind them of this Apple case. This is a private company that is deliberately making it difficult for consumers within the EU Single Market. This isn’t a legal problem – it is a problem of the company’s mentality.

* – make what you wish of my computer and software choices. This is essentially a blog entry about consumer rights, and I have chosen these two apps as examples as they are reasonably expensive paid-for apps.** – note that I have lived in Denmark in between, but for whatever reason had never needed a Denmark-specific app and had hence not encountered this problem.*** – the caveat to this is that once an App is installed on a Mac, it updates correctly through the Mac App Store, regardless of which national version of the App Store is currently being used. It is only that an App cannot be reinstalled that way.

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13 comments

Let’s say that you need to pay for a bill denominated in euros and that Apple forces you to pay with your British card. This means that:
– You need to sell euros to buy pounds in order to top up your British card. You will lose some money here due to currency conversion charges.
– You need to buy back the euros when you use your card. You will lose some more money here due to currency conversion charges.
– While you hold your pounds, you are risking that your pounds change in value with regard to your euros.

On the other hand, a German customer will not have to exchange his euros into pounds – he can give them directly to Apple, thereby not having to pay for any currency conversion charges. The German customer therefore finds that the product is slightly cheaper when accounting for currency conversion charges. The German customer also won’t be subject to any risks resulting from currency fluctuations.

As it seems, Apple treats German customers better than British customers with respect to this. Would it be possible to use anti-discrimination laws to force Apple to treat British customers in the same way as German customers?

Also read http://euobserver.com/economic/126840 about VAT rules coming into force on 1 January 2015:
“To find out where a consumer is based – sometimes it is not obvious as the person may be paying by PayPal – a company needs two pieces of consistent evidence such as credit card number and an address.”
If tax legislation forces companies to verify that the customer’s country of residence is the same as the country of issue of the customer’s payment card, then how does the customer enjoy his right to use a payment card issued in a country other than the country of residence?

This is just stupid. I have noticed that cards are national in several ways:
* If I use my Swedish VISA card in Denmark, the card reader’s interface will often switch from Danish to Swedish. Quite harmless.
* If I use my card in a British cash machine, the cash machine will often suggest an alternative exchange rate. This is dangerous: my bank typically offers a much more favourable rate than the one suggested by the cash machine.
* If I try to use my card with Yahoo! Japan’s “kantan kessai” payment option (http://payment.yahoo.co.jp/), then I am required to enter my name in Japanese katakana characters as registered with my bank. If my bank does not know how my name is written in katakana, I have to use a different card. Obviously, banks outside Japan do not know how their customers’ names are written using katakana characters. This is a big problem: I simply can’t use that payment option.

How is this compatible with the Single Euro Payments Area? If you are paying someone in euros, it is my understanding that there not supposed to be any difference between domestic and international payments, as long as both parties use European banks. However, Apple obviously differs between euro payments made from Germany and euro payments made from the United Kingdom. There may be a difference on your side (pounds may need to be exchanged for euros), but there should not be any difference on Apple’s side.

The strange thing for me here is not the national stores but the fact that you can’t buy in a UK store with a German VISA card. I mean you can go to London and buy anything you want with any VISA card, can’t you? Nobody asks you for an ID card.

So possibly this is really all related to music licencing deals and not to any EU-related legislation?

@Tim F – I think it’s to do with the speed of the approvals process. It’s quicker and easier to approve something for one national store than to globally approve it. That was at least what some Danish developers once told me was the reason why a Copenhagen University app wasn’t doing well with Erasmus students who had not switched their accounts.

@jon: you are quite right. But what I’m not sure about is who makes the choice to segment apps regionally – is it Apple or the developer? For example, I maintain a UK app store account (as I still have a UK credit card). I can happily download all sorts of apps relating to Singapore (which I visit quite regularly), but can’t download the app for my Belgian mobile phone provider, as that’s only available in the Belgiah store. And what lies behind that choice? Is it revenue maximisation, ignorance (why would someone outside Belgium ever want to look at a Belgian mobile phone account), or are there other hidden rules out there that developers don’t want to fall foul of? Either way, it is something we need to try and get to the bottom of…

@Jon: A lawyer who gets paid by the hour could have all sorts of fun with this. None of it would be exactly straightforward, but for sure this is a legal problem.

My earlier comment contemplated a breach of competition law, which can also be the basis of a private suit. The challenge would be to establish dominance in an appropriately defined market.

Depending on what jurisdiction you are/were in, there might be a breach of contract. Probably not any of the explicit terms, which I’m sure were carefully crafted by expensive American lawyers, but European legal systems tend to tend to imply all sorts of “reasonable” terms in the contract, as well as disallowing terms that are “unfair”/”unreasonable”.

And then there is the doctrine of unjust enrichment, where – again depending very much on the jurisdiction – there might be a story along the lines of “I agreed a contract with Apple for period X, and paid up front, but now Apple’s TOS make its compliance with the contract for the full period impossible, so Apple is unjustly enriched for the period when it’s not providing the service contracted for”. But this is also all sorts of messy. (Fun, though.)

@Tim F – thanks for the comment! I was careful here to distinguish between things that I know are complex (like music, films) and stick to things that should not be (like a piece of text editor software). I would even be willing to tolerate if Apple were to tell me “Sorry. You’re switching from Germany to the UK, and Cambio is not allowed in the UK, so we will remove that app as a result”. As it is this is *even* more opaque than that, sadly.

So Jon – to take up your Twitter challenge! You have hit on a key problem with the digital single market. Apple currently needs to ‘identify’ your member state of residence so it can segment the content it provides to you. Mostly this isn’t about apps, but about things like music and video where licensing restrictions are still applied at the member state level. Looking at how licensing works could do something about that. But the second issue – portability of apps and music – is another thing. It does seem strange that an EU citizen is prevented from taking things they’ve bought with them when they move member state. After all, if you had the products physically (eg on a CD-ROM) no-one would take it off you at the border. All of these are issues we hope the Commission will look into as part of its big Digital Single Market package due next year. Please keep the examples of DSM barriers coming!

@Arjan – oh those things with digital rights and commentaries stink too! It’s just on those I know it’s hell to fix. In this blog entry I wanted to underline things that would not require a change of law to be fixed by Apple, but would make the Single Market work better.

@Martin – how would you address the case I outline then? Surely this is not actually a legal problem?

@Robbert – really? i.e. if you have a gift card credit or something? That’s really absurd. I’ve not encountered that myself as I only pay as and when with a credit card. There must be grounds for a complaint to an EU consumer centre on that at least!

Thanks for the post. I had the same issue when moving to and then again from the UK. However, you forgot to mention that on top of loosing anything purchase in a different county you are unable to change country unless you have spend all the money on your account which means that you are forced to spend your money or have to forfeit the remainder. Completely beyond me!

This is why the Commission’s competition policy is so fussed about cartels and abuses of dominance that have the effect of restoring the borders in the internal market. (See also, outside competition law, the Ms Murphy/Premier League satellite decoders case.)

If you can prove that German prices are different than British prices, you’re in business. (Or at least in small claims court.)

Oh, thank you so much for writing this. I was beginning to think I was alone in not understanding situations like this AT ALL!

As an example: I was once given a 50 Euro iTunes gift certificate for participating in some survey. I could not redeem it, because it was purchased in one EU-Member-State iTunes store, and I had the ignorance to want to redeem it in another.

You seem to be quite forgiving about some of those rights restrictions, by the way, but I really am not. Why could I not legally watch, to name just an example, the FIFA Worldcup final with Dutch commentary from out of Germany. Or why can I not access all content available in the EU? Why do I need to watch tv-series or movies dubbed in German (or French, or…), when I simply want to have the original version with English or Dutch subtitles?